Government ‘failing to ensure financial stability of police forces’

Police forces in England and Wales are struggling to maintain an effective service as the government fails to ensure they are financially sustainable, according to the public spending watchdog.

Central government funding to police commissioners – at £7.7bn this financial year - has fallen by 30% in real terms since 2010-11, according to a National Audit Office report out today.

Police and crime commissioners in England and Wales have suffered a 19% real-terms reduction in total funding between 2010-11 and 2018-19, the analysis showed. Police also receive funding through a council tax precept.

Auditors concluded: “The Home Office’s light touch approach to overseeing police forces means it does not know if the police system is financially sustainable.”

They recognised: “While no police force has failed financially, there are signs emerging that forces are finding it harder to deliver an effective service.”

An internal Home Office report in November last year concluded forces were “facing increased pressure in meeting the demand for police services”.

The proportion of funding to the police varies between the forces and the NAO discovered the forces most affected by reductions were those whose commissioners relied on higher proportions of funding from central government.

In 2018-19 the proportion of commissioners’ funding coming from central government ranged from 43% to 81%.

Forces were also found to have reduced their reserves from a peak of 19% of net revenue expenditure (£2.1bn) in March 2015 to 15% of net revenue expenditure (£1.7bn) in March 2017.

Commissioners have a legal duty to ensure forces have adequate reserves, the NAO noted.

But it added that the Home Office “does not know what level of reserves forces need to be financially sustainable” – it is currently working this out what an “appropriate” level of reserves is with the commissioners – and that local authorities held 40% of net revenue expenditure in reserves in March 2017.

The watchdog criticised the government for not having a long-term plan for policing and for not properly understanding what police services required and their costs.

As there were “no common standards for measuring all demands for police services and their costs”, the NAO highlighted, “there is no national picture of what forces need”.

It added: “The way the [Home Office] chooses to distribute funding has been ineffective and detached from the changing nature of policing for too long, and it cannot be sure overall funding is being directed to the right places,” the NAO said.

The Home Office is responsible for overseeing the 43 police forces in England and Wales, assessing the levels of funding needed and ensuring they provide value for money.

But the NAO said it could not conclude that the Home Office’s oversight of the police system is value for money.

Out of the £12.3bn total police budget for the current financial year, £8.6bn came from central government. This was split between £7.7bn going directly to commissioners and £945m ‘reallocated’ to be spent on national priorities, the NAO showed.

The auditors made a variety of recommendations, including for the government to have a clearer understanding of whether police funding is sufficient to support forces and to select the “right data” to do this, and systematically review that data.

They also suggested the department should review the police funding formula and adopt an approach to funding that “takes account of forces’ local circumstances more fairly”.

A Home Office spokesperson said: “Our decision to empower locally-accountable police and crime commissioners to make decisions using their local expertise does not mean that we do not understand the demands on police forces.

“In addition, the report does not recognise the strengths of PCCs and chief constables leading on day to day policing matters, including on financial sustainability.”

She added: “We remain committed to working closely with police and delivered a £460m increase in overall police funding in 2018-19, including increased funding for local policing through council tax.”

2015 Public Finance. Public Finance is published on behalf of the Chartered Institute of Public Finance and Accountancy by Redactive Publishing Ltd. All rights reserved. Reproduction of any part is not allowed without written permission. Redactive, 17-18 Britton Street, London, EC1M 5TP